All Forum Posts by: Angela P.

@Micki M. - just joining / reading through these threads and trying to figure out the right path. Is your vision up and running? Just want to make sure I am clear on what your company does...the RE License in CO requires 2 years under a brokerage right? I however don't want to be a RE agent who sells houses to other people I just want it for my own professional use as an investor. I just started researching RE schools so I am at the very beginning. Does that mean once I pass the exams, I can join a firm (if I am accepted of course) like yours and would meet this 2 year requirement? Thanks for your advice on the matter.

@Bryan H. Congrats on Deal #3! I am currently done with rental #1, and trying to determine the direction I want to go for #2.

I am curious what your (and everyone else here) criteria is for looking / vetting homes.

The 50% rule is great, but I am looking to see if anyone is using any other specific criteria to determine what will be looked at.

No right answer -- just curious what everyone specifically is looking for in their deals.

Thanks for your input!

Lafayette has grown immensely since my childhood / teen years there. It is in my mind still one of the greatest small towns in Colorado (Louisville is awesome too, it's where my last few corporate world jobs have been and where most of my friends grew up).

Old town is great! I have lots of friends from over in that area and lots of their parents still live there.

My first rental is a townhome in Thornton that I lived in for 7 years. It was a 2bd/2ba but we did a giant renovation in the basement last year to give it another large bedroom, large full bath and a living room. I now have the bug and I am looking to spend the next 5-10 years buying and leasing as many as I can that fit my criteria so that I can retire from being a full time corporate CPA.

Hope we see you at some of the meetups!

Hi Drew!

I am a Colorado native, born in Boulder and grew up/lived in Lafayette for 18 yrs (Centaur Village to be exact).

Also just started with my first buy and hold rental in the last 30 days.

There are a couple great "Meetup's" -- I am going to my first one 08/03 where the REI's play "CashFlow" - should be fun. There is one in Aurora that is 08/03 and one in Broomfield on 08/10. There is also a free Rich Dad® Education Workshop in Westminster I just found, that is on 07/30 next week.

Hope we run into each other, and good luck on your investing adventure!

Take care,
Angela

Thanks everyone, you've certainly given me a lot to think about.

Michael B. - I appreciate you telling me it really is a risky venture, especially for a newbie. I think I will start smaller. I am not interested in getting in over my head.

Thanks everyone!

Hi All - Looking at a potential property that was brought up to me by a co-worker who heard me talking about real estate investing. Just pays to talk out loud sometimes!

Coworker bought for her son when he attended college, has had some renters in there for past few years but she lives very far away and would really just like her equity out of the home to do things to her primary.

Here is the scoop:

* 2bd/1.5ba, 1100sf Condo in the heart of University of Colorado Boulder campus area. Brand new kitchen this year, newer updated full bath a few years ago.

* There is 100% for sure asbestos in the walls, they found it when the kitchen had to be gutted. There is a community heating system through steam pipes that runs underneath the complex, one of the pipe's cracked and a bunch of the condo's ended up with mold. The HOA was responsible, they had the condo abated, the mold removed, and had to pay for the new kitchen, at which time the asbestos was located and had to be dealt with special.
(first question here -- what do I need to do to make sure this was all handled appropriately and isn't a problem for me in the future?? and is this automatically a giant mess and I should just walk from here?)

* Asking Price (just in passing at this point but she thinks it's worth $190K, at first glance using just Zillow she's pretty spot on, it says $187K - I am having my realtor actually do real comps on this right now.

* HOA's are $400!!! Apparently it covers all the normal HOA stuff plus electric and heating as well.

* Property taxes are ~$1200/year

* Not sure what landlord insurance would be on this yet - reasonable to presume $1200/year?

* Potential Rent in this college down is $1700 - $2000. She is getting $1700 right now but she did say they are undercharging based on surrounding area and after the upgrades / new kitchen she thinks I could get $2000.

The house has appreciated $30,000 for her in the last 6 years, and Boulder Colorado is one of the most expensive places to own a home.

Please be critical and let me know if this is something that you would buy and why!

Angela

All fantastic responses and super helpful guys!

I should restate part of my story that was not written very well, apologies for that. Hopefully this helps with your opinions.

The comp information is not outdated, the comps are current, and they are for other similar outdated condos. So I think I could get the condo for around the mid $40's.

Comps for similar properties in the area that are nicer and look at least semi rehabbed sold for high $60's to low $80's .

I've been trying to estimate closing costs - my realtor said to assume an approx. 8% of the purchase price.

So here are my new assumptions:
*Purchase price $45,000
*Upgrades/Rehab Estimate $10,000 (could be a ton less but I've heard you should over shoot)
*Total Cost = $55,000

Mortgage Estimate (15yr mortgage, 4%): $380.00/mo
Property Taxes: $25/mo (per the city records lookup)
Home Owners Assoc: $150/mo
Additional Cushion: $150/mo
Total Costs: $705/mo

Rental Potential for 1bd/1ba in the area = $850/mo

Potential Monthly Cashflow: $145/mo

Those of you that flip houses, it sounds like this would be a horrible flip, mostly because the ceiling on the sales price would be in the $60's and that leaves me only $5K which will be eaten up in realtor and closing costs.

Am I thinking along the right path here?

Hi All!

I am looking at a potential first deal, and I would love opinions from you seasoned folks. It is a 1bd/1ba condo, 600SF, in the older part of the town, but not a bad neighborhood by any means. It is surrounded by ALL the conveniences people look to have. It is not in bad shape, just outdated, so in order to get max price I would put in some of the basics (nicer kitchen and bath, nice neutral paint, new carpet or laminate, fireplace mantle etc etc).

Outdated home comps in same complex and community are ~$40k-$45K. There is a totally rehabbed / property for sale right now at $85K but it's a 2Bd/1Ba, and it's not sold yet so I can't really rely on it right now.

Questions are:

1) Is it reasonable to assume (if the $85K rehab is accurately priced and sells at that price point) that we could sell this one after rehab for ~$70K? How much does a bedroom increase/decrease a selling price (on average).

2) If I go Hard Money route (let's just guess its "3pts / 12%" - I also have no idea what that means but people have said those as average costs in other posts) -- how do I calculate what my holding costs would be related to the financing? Assume a more than conservative estimate of 6 weeks from close to close.

3) I've never sold a home before -- but I know there are costs related to closing that need to come out of this deal -- how do I estimate what funds are needed to close? Where would I even go to get estimates on that? Getting quotes on materials and labor is easy -- go to home depots and call contractors for bids, but this area of deal analysis is blank for me.

4) Is this a good deal as a flip or a rental or neither and should I just walk away?

For my first deal I am not looking to make $20K - I want to start small with a small footprint and just really see the process A-Z, I want to make a profit of course, but even $1K-$2K at the end of this would be OK by me, just to use as a learning platform and not get in over my head.

Thanks for all of your advice in advance!

Angela

Bryan L. - that is some great advice too, and thank you.

I think you're 100% right as I start down this road, I am excited to pick all the finishes and my husband is interested in doing all the work, so you have that nailed. I am really trying to educate myself as much as I can to help us find middle ground in both directions.

One saving grace (but also could potentially be a problem) is that I am a 100% type 'a' accounting professional. I money pinch and save like nobody's business, and although love nice things, I am big on not splurging on much of anything. I always tend to think that 'cheaper the better.' This ends up going the other direction of your "gold plated fixtures" unfortunately, and is where I may fall victim to not putting the money where it's needed to really WOW a buyer upon entering the home.

But thanks to folks like you all I am learning (slowly) but still learning for sure.

Joshua Dorkin thank you for building this site, I don't think I would have tried to go any further with REI than just 'dream' about how I wish I could do something like that someday. Today is my Someday!

Thanks guys!
Angela

Thanks everyone - those are great tips. I'll be sure to reach out to realtors and read J's book.

Appreciate your responding!